It's becoming a ritual. Medicare trustees release an annual report projecting bankruptcy at some point in the not-so-distant future. And America yawns.
So why should 2014 be any different? Because, as former Congressional Budget Office Director Douglas Holtz-Eakin points out, it's not just Medicare that Medicare is taking down, it's the federal budget.
Holtz-Eakin's observation came in a recently released report published by the American Action Forum entitled "The Future of America’s Entitlements: What You Need to Know About the Medicare Trustees Report."
Holtz-Eakin is president of AAF. He is joined on the report by co-authors Gordon Gray, AAF's director of fiscal policy, and AAF health care data analyst Conor Ryan.
Medicare can't hit major league pitching
When a ball player fresh up from the minors goes 2-for-46 in the big league, the usual conclusion is that he can't hit major league pitching.
That's Medicare's problem: As the AAF report noted, Medicare's revenue has fallen short of its spending in all but two of its 46 years since opening day in 1965.
The Medicare shortfall in 2013 was $289.2 billion. That includes a $45 billion shortfall for Medicare Part A (hospitals), $184 billion for Medicare Part B (doctors) and $59.8 billion for Medicare Part D (prescription drugs).
That's just for 2013. To close that one-year shortfall, according to AAF:
* Balancing Part A would require hiking the Medicare tax from the present 1.45 percent to 1.75 percent.
* Balancing Part B would require increasing physician's annual premiums from $1,259 to $4,935, an increase of $3,676.
* Balancing Part D would require boosting seniors' premium from $360 to $2,534, an increase of $2,174.
One-fourth of the national debt
To put Medicare's financial crisis in further perspective, consider that the program's $289.2 billion shortfall in 2013 equalled 40 percent of the federal government's annual deficit.
Over its entire life, Medicare has accumulated a $3.4 trillion shortfall, every penny of which was covered by general revenue taxes collected over and above the Medicare tax. That's just short of one-fourth of the entire national debt.
As the AAF report summarizes, "America’s fiscal trajectory is unsustainable and Medicare is the primary source of red ink driving this trajectory."
No, Obamacare didn't fix Medicare
"By the end of 2014, the trustees project that the Obama administration will have overseen a $1.7 trillion Medicare cash shortfall.
"At such unprecedented levels of cash shortfalls, it’s evident that President Obama and the Affordable Care Act have failed to ensure that Medicare will be there for today’s seniors, let alone the future generations of older Americans."
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